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Invest in the Philippines Key Facts, Opportunities and promising sectors for EU companies Valerio Mazzone EU Outreach Officer
ASEAN (Association of Southeast
Asian Nations)
#1 in Marine Diversity
#1 in Voice Call Centers
#1 Sailors and Seafarers
#1 Musicians
#2 in BPOs
#3 Longest Coastline
#4 in Gold Reserves
#4 in Shipbuilding
#5 in All Other Mineral Resources
#12 in Human Resources
Did you know?
Competitive investment
environment Language proficiency Customer-service mindset Good work ethics Growing young middle class Consumer oriented society
Why the Philippines
Business Opportunities
Tourism – IT/ICT/BPO Renewable Energy Environmental Agribusiness Food&Beverage Maritime - Construction Manufacturing…
Welcome to the Philippines!
Population
• 100 million
• 12th most populous country in the world
• 23,5 years: the average age of the population
Economy
• GDP: $289 Billion (EUR 258 Billion) in 2014
• GDP per capita: $2.913 (EUR 2.597) in 2014
• GDP growth 6.1 % in 2014 (7.2 % in 2013)
Language
• Filipino
• English (3rd largest English-speaking country in the world)
The Philippines
ECONOMIC GROWTH & COMPETITIVENESS
• GDP growth 6.1 % in 2014 (7.2 % in 2013)
• Ranked 52nd out of 189 countries from 59th (+7 places) WEF’s Global Competitiveness Report 2014-2015
EASE OF DOING BUSINESS
• Ranked 95th out of 189 countries (+13 places) in 2015
• 108th (+30 places) in 2013 World Bank Doing Business Report
INVESTMENT GRADE RATINGS
• Fitch, S&P, Moody’s, Japan, Korea
• Increased FDI interest towards Philippines
EU & The PH: Total Trade
Goods :
€12.5 Billion (+16% in 2014)
Services :
€3.1 Billion (+17% in 2013)
EU-Philippines Trade
Goods €6.8 Billion (+19.3% compared to 2013)
Services €1.4 Billion (+12% compared to 2012)
Goods €5.7 Billion (+11.8% compared to 2013)
Services €1.7 Billion (+21% compared to 2013)
EU E
xpo
rts
EU Im
po
rts
The EU becomes the Philippines’ 3rd largest trading partner in 2014
EU and Philippines
• Total stock of EU direct investments € 800 million (about
26% of total FDI stock in the Philippines) in 2014 • European companies are estimated to employ around
450,000 Filipinos • Filipino migrants in the EU as well as Filipino seafarers
manning European ships sent $3.35 billion back to the Philippines in 2014, making the EU the second largest source of remittances to the Philippines
# Country Exports (EUR Mn) Imports (EUR Mn) Total Trade
2013 2014 2013 2014 2013 2014
1 Germany 1,729 2,036 1,982 2,330 3,711 4,366
2 France 1,460 1,897 308 287 1,768 2,184
3 Netherlands 390 433 1,322 1,527 1,712 1,960
4 UK 398 430 422 461 820 891
5 Italy 422 439 179 187 601 626
10 Poland 41 78 59 99 100 177
14 Ireland 80 99 32 35 112 134
20 Slovakia 3 8 9 16 12 24
23 Luxembourg 5 6 4 6 9 12
26 Croatia 8 3 3 1 11 4
EU and PH: Trade Figures
Incentives to invest in the
Philippines
EU - Most Favoured Nation (MFN)
Board of investment –
Investment Priority Plan (IPP)
Generalised System of Preferences Plus
(GSP+)
PH - PEZA
Under the Philippine Economic Zone Authority
(PEZA) many incentives have been developed to attract foreign investments to the
country
Economic Zones
Incentives (fiscal and non-fiscal)
Services to companies
Investment promotion
Incentives to invest
Eligible activities under PEZA
Export Manufacturing
IT Service Export
Tourism
Medical Tourism
Agro-industrial Export Manufacturing
Agro-industrial Bio-Fuel Manufacturing
Logistics and Warehousing Services
PEZA: Incentives to invest
Fiscal
• Temporary tax exemption or lower tax rate
• Tax and duty free importation for raw materials
• Zero rate of VAT for local purchases
• Exemption from payment of any and all local taxes
• Exemption from wharfage dues and export tax, impost or fees
• Exemption from expanded withholding tax
Non-fiscal
• Simplified Import – Export procedures
• Non-resident Foreign Nationals may be employed by PEZA-registered Economic Zone Enterprises in supervisory, technical or advisory positions
• Special Non-Immigrant Visa with Multiple Entry Privileges
Sectors
Energy Renewables ICT &
IT/BPM, and KPM
Food Agriculture
Infrastruc-ture
Transport Maritime
Tourism
HealthcareMedical
Environment Consumer
Goods Retail
Financial Services
Manufactu-ring
Pharma-ceuticals
Automotive
IT-BPO (Information Technology and Business Process Outsourcing)
• $25 Billion (EUR 18.7 billion) revenues
• 10% of the world market Forecast 2016
• 960.000 in 2013
• 1.3 million by 2016 Jobs
• 16% in 2013 Growth
• Manila: the world’s 2nd most important place for BPO destinations
World-class destination
IT-BPO: the market
• #1 in voice. Idiomatic American English 3rd largest English-speaking country. #1 in terms of English accent (Everest Group)
• 400.000 graduates each year
• #2 in non-voice BPO: back office and knowledge process outsourcing
• Many other segments: IT outsourcing, health information management, Engineering services outsourcing, Creative services outsourcing
IT-BPO: Opportunities
In-Voice-BPO (contact center)
Non-voice-based BPO (Back office or Knowledge process outsourcing – KPO )
IT outsourcing – Health Information Management – Engineering services – Creative services outsourcing
Skilled labor - Broadband speeds – Priority investment area (Fiscal and non-Fiscal benefits for qualified investors)
Tourism
• 4.8 million people in 2014
• 10 million people in 2016 (expected) Arrivals
• Total contribution around €20 billion (11.3% of GDP) in 2013
• €7.93 billion direct contribution to the GDP (4.2% tot. GDP) GDP
• 9.6% in 2013 Growth
• Climbed from 94th to 82nd in Travel & Tourism Competitiveness Competitiveness
Tourism: the market
• #1: Domestic travelers
• #1: Korea foreign tourists
• EU tourist arrivals ranked 4th (400.000 tourists in 2014)
• 7107 islands with outstanding white sand beaches, mountains, volcanoes
• Among the most famous destinations: Manila, Mactan, Camarines Sur, Palawan, Boracay
• Crossroad of Asian, European & American cultures, Service-oriented culture
• Public-Private Partnership projects implemented to upgrade the Philippine
infrastructures necessary to develop the tourism
Tourism: Opportunities
Tourism Facilities:
Hotels, resorts, spa
Travel agencies and Entertainment
National Regulations
Medical and healthcare tourism
Healthcare & Medical
• One of the top 15 destination for medical tourism worldwide
• 80.000 medical tourists in 2010 Market
•1800 hospitals, 60% privately owned •21 hospitals registered for medical tourism
Hospitals
• $3billion (EUR 2.24 billion) revenues by 2015
Medical tourism
Healthcare & Medical: the market • Higher medical costs in developed countries: elderly population worldwide
may find more interesting Healthcare & Retirement services in the Philippines
• Large pool of qualified, English-speaking healthcare professionals
• Medical staffs trained abroad
• Competitive prices: for many surgical procedures the Philippine has a better cost-effectiveness than its competitors such as India, Singapore, Thailand
• Many retirement facilities and special visa for retirees
H & M: Opportunities
Public Private Partnerships
Healthcare BPO industry
Software and Technology
Private healthcare development
The Philippines export skilled workers
Agribusiness
• 1.83% in 2014
• 1.12% in 2013 Growth
• F&B processing contributes 50 % to the country’s total manufacturing output
Value added
• 12 million workers
• 30% of the total labor force Jobs
• Among one of the top producer of tropical fruits, #1 in coconut, #1 in pineapple, among the top producers of bananas
• Crops subsector represents 52.72% of the total agricultural production. Production of Palay (rice) & Corn recorded a significant increase over the last years
• Multinational investments in the food, beverage and tobacco industries
Agribusiness: the market
Agribusiness: Opportunities
Manufactured products from coconut, sugar, coffee beans
Post harvest technologies
Mechanical equipments
Finished products from processed food industry
Imported agricultural raw materials and ingredients
Manufacturing
• Food processing: 49.7%
• Oil processing & Chemicals: 13.4%
• Electronics: 13% Production
• Manufacturing represents 84% of the EU exports to the Philippines
• Semiconductors represent more than 50% of the total Philippine exports
Trade
• 12.3% in recent years
• Forecast 7-9% growth in the next 20 years Growth
Manufacturing: the market
• Strong investments opportunities e.g the Japanese manufacturing
industry invested PHP 34 Billion (EUR 580 Million) in 2013
• Philippine competitiveness among the other Asian emerging economies
• The government and private sector set up various industry roadmaps
that are expected to give a boost to the manufacturing industry
• Proximity with the fast growing markets in Asia. The Philippine is about to become a regional hub for the South-East Asian markets
Manufacturing: Opportunities
Higher-value manufacturing
Food Processing is the leading manufacturing
sector
Semiconductors are the core products of the
electronics manufacturing
Automotive
• +29.5% (234,747 units sold) in 2014
• 181,283 units sold in 2013
• At least +16% year-on-year Sales
• Production: 75,413 units
• +5% year-on-year Production
• 500,000 sales in 2022
• 70% manufactured from domestic assemblers
Forecast
Automotive: the market • ‘’Knock-down model’’: incentives to import the cars
complete but totally disassembled
• High tariffs on imports of totally assembled cars
• Ban on the imports of used cars
• Japanese brands market share over 57% of the market
• Private vehicles (90,287 units sold in 2014)
• Commercial vehicles (144,460 units sold in 2014)
Automotive: Opportunities
ASEAN Free Trade Agreement
Cebu has been identified as a potential hub thanks
to its port facilities
Quality standards which are not the same as in
Europe, Japan, US
Consumer Goods / Retail
• $34.9 billion (EUR 26 billion) in 2013
• 4.2% average growth in last decade
Added-Value
• Household consumption: 74% of GDP (>US & Europe)
• Food: 43% of the purchases, $80.25 Billion (EUR 60 billion)
Market
• 18% of the workforce (5.25 million workers) Jobs
Consumer goods / Retail: the
market
• Strong private consumption growth
• Expansion towards other regions (e.g Cebu, Davao)
• Consumerist culture
• Different players from sari-sari stores to hypermarkets
• Most of the foreign investments in retail businesses through joint ventures with a Filipino company
Consumer Goods / Retail:
Opportunities
Rapid expansion of the low-end/middle-end products due to the
economic growth
High-end products from Europe
Food retail is the major component of the retail market
E-commerce / Online retail
Energy/Renewables
• Among the highest electricity rate/price in South East Asia
Competitiveness
• 25% of the energy supply from renewable energy sources
Supply
• Increase the installed capacity by 200% up to 10 Gigawatts by 2030
Project
Energy/Renewables
• Feed-in tariff incentive with preferential rates for electricity
sales from renewable power plants
• Many improvements in the 2000s to create a real and fair
competition in the sector (Electric Power Industry Reform Act)
• Power shortages are a current problem in many provinces as
well as in the capital
• Ambitious targets of the government through the National Renewable Energy Program (NREP)
Renewables: Opportunities
Geothermal
(75% increase by 2030)
Hydro
(60% increase by 2023)
Biomass
Wind
Solar
Infrastructure & Transport
• Fastest growing sector among South-East Asia Growth
• 2.09% of the GDP (15% of the national budget) dedicated to the sector
• Target of 5% of the GDP by 2016
Public Investment
• Growth rate forecast 2014-2033 of 5.2% per year
Value-added
Infrastructure & Transport:
market
• Most congested infrastructures in the ASEAN, especially
in Metro Manila
• Public-Private Partnerships to upgrade the existing infrastructures. Currently 47 projects covering transportation and road networks, education, healthcare
• The construction sector is driven by the demand for homes and for office spaces from the business-process outsourcing (BPO) sector
Infrastructure & Transportation:
Opportunities
The present liquid capital market and a low interest rate environment present opportunities for investing
in infrastructure
Public-private partnerships, infrastructure support to
tourism, and infrastructure for peace and development
Lack of infrastructure
Maritime
• 5.42% of GDP annual growth • 5.22 billion USD remittances in 2013
Growth
• 400,000 Filipino seafarers overseas workers • Approximately 35 - 40 % of the world’s seafarers
Jobs
• 4th shipbuilding nation worldwide in 2013 Competitiveness
Maritime: market
• The Port of Manila is the largest in the country. It includes three port groups: Manila North Harbour, Manila South Harbour and Manila International Container Terminal. There are two additional ports in the vicinity of the Capital: Batangas and Subic
• Manila Port Congestion
• Existing infrastructure is not sufficient to accommodate the rising levels of tonnage passing through Manila
• The Philippines is ranked only 29th, UNCTAD Maritime Review 2012
Maritime: Opportunities
Existing infrastructure is not sufficient to meet current needs
Expansion of the ports and their facilities alongside an integrated
road development and management system
European countries need skilled labor in the sector
Environment
• More than 15 million metric tons of solid waste product every year
• 8,200 metric tons/day Waste
• $800 million (EUR 597 million) needed before 2022 to ensure the water supply Investment
• 22 typhoons per year on average Natural
disasters
Environment: market • Growth of the domestic, agricultural and industrial
demand for water
• Water sector is generally regulated by PPPs (e.g MWSS-RO for Metro Manila)
• Overloading of garbage dumpsites is a major problem
• Master plan for flood control project in Metro Manila
• 11 projects, €5-6 billion
Environment: Opportunities
Solid waste management & Water Management
Project to re-use 25% of the garbage by 2030
Flood Control
Technical assistance for distribution and sanitation systems
Recycling facilities
(metals, raw materials)
Composting and biogas production from organic waste
Leachates treatment and biogas re-use from landfills
Pharmaceuticals
• 3% to 4% in recent years Growth
• EU exports totalized €311 million in 2013
• 11.34% growth of the imports (2005-2010) Trade
• In 2001 every Filipino spent roughly $29 (EUR 21) per year on healthcare
• 2011: $97 (EUR 72) Expenditures
• €2.2 billion generated in 2013
• 3rd largest market in the ASEAN Market
Pharmaceuticals: the market
• Foreign drugs manufacturing is almost exclusively subcontracted to one
local manufacturer: InterPhil Laboratories
• The government has been increasing public spending on healthcare alongside its efforts to bring PhilHealth (the public health system) scheme available to all Filipinos
• Improvements in the health insurances. Products more affordable for
everybody
• Recent estimations indicate that the pharmaceutical market will more than double by 2020
Pharmaceuticals: Opportunities
Pharma market will more than double by 2020, generating
revenues worth of USD 8 billion (EUR 6 billion)
The average spending per capita on healthcare has already more than tripled since the beginning of this
century
National Health Insurance Act was signed, which brings national health insurance scheme PhilHealth to the
reach of all Filipinos
Success Stories
Upcoming events for SMEs in the PH
March 2016 - Worldbex (architecture, construction,
interior design, furniture)
June 2016 - SIAL Philippines (Food & Beverage)
July 2016 - Energy Smart (Energy - Renewable)
October 2016 - Philconstruct (Construction
machinery, construction and building)
October 2016 - Agrilink (Agriculture)
Join the EU Pavilion at Worldbex Business mission for EU SMEs around Worldbex in Manila
March 16 to 20, 2016
10 EU SMEs will be selected - total cost € 3,200.00 per SME
includes:
Exhibition booth in the EU Pavilion for 5 days
B2B meetings with selected potential partners
Networking dinner
Accommodation in 5*or 4* hotel (estimated)
Flight round trip Europe – Philippines (estimated)
Worldbex is the most relevant tradeshow in the architecture, construction and
interior design sectors in the Philippines. The event showcases products in the
building construction, home furnishings, home textiles, architecture and designing
Upcoming events for SMEs in EU
January 2016 - IMM in Cologne (Furniture and
interior design)
March 2016 - CEBIT in Hannover (Business IT
event)
September 2016 - SPACE in Rennes (Agriculture)
October 2016 - SIAL in Paris (Food)
Our support to EU SMEs
Analysis and advocacy to better access the market
Business coordination and support
Market research and strategies
Delivery of information on business potential and opportunities
Business empowering missions
Regular update on trade and
investments developments
Contact Information
For more information please send an email to:
Valerio G. Mazzone
EU Outreach Officer
Office Address: EPBN, 19F AXA Life Center,
Senator Gil J. Puyat Avenue corner Tindalo St.
Makati City, Philippines 1200
Tel: +632 8451324
Fax: +632 8451395
Thank you!